EIU Global Forecasting Service

There is a major military confrontation on the Korean peninsula

Low probability, Very high impact; Risk intensity =

January 24th 2018Introduction

The tensions between the US and North Korea have been a geopolitical constant since the end of the Korean War in 1953. However, the situation in the Korean peninsula currently appears more serious owing to the rogue regime's progress in developing a long-range missile that can threaten US soil and in mastering nuclear technology.

Analysis

Further heightening risk, the US president, Donald Trump, has taken a more hardline view towards North Korea than his predecessor. The combination of a more aggressive stance by the US and the likelihood of North Korea becoming a fully fledged nuclear state capable of hitting the US mainland by 2018 or early 2019 could result in an escalation to major armed conflict. Indeed, risks will be heightened over the next two years, with some in the US calling for a preventative strike before North Korea has the capability to launch intercontinental nuclear missiles. However, under such a scenario North Korea would almost certainly retaliate with conventional weaponry and potentially shorter-range nuclear missiles, bringing devastation to South Korea and Japan in particular, at enormous human cost and entailing the destruction of major global supply chains. The likely human and material consequences of going to war with North Korea, arguably an unpredictable state at the best of times, remain the strongest deterrents to war. However, the North will continue to develop its nuclear weapons programme regardless of the US's threats or any economic pressure generated by tighter international sanctions. China will recalibrate its trade and diplomacy with North Korea in line with UN sanctions, but will seek to avoid causing instability in its neighbour.

Conclusion

The US's position is the most fluid. A pivot from aggression to containment is likely in the medium term, but before then the risk of an attack to attempt to damage North Korea's military capabilities is growing.